TVA's $2 billion mistake

TVA's decades-long history of nuclear plant planning debacles, horrendous cost overruns and stunning delays in bringing plant construction to completion has accustomed the agency's ratepayers to mutely accepting just about any new setback related to the nuclear program. Every time a new mind-boggling revelation arises, ratepayers' armor of imperturbability just seems to get thicker. The latest TVA inspector general's report on the delays and cost overruns at TVA's Watts Bar Unit 2 reactor should at last provoke ratepayers' ire.

The reactor was originally expected to be completed by October of this year at a cost of $2.5 billion. Yet on April 5, barely two months ago, the agency publicly admitted that the work schedule had doubled -- to late 2015 -- and that the cost had doubled, as well.

Both the announcement, and the lateness of it so close to the anticipated completion date, were shocking. If the schedule had fallen so deeply off the tracks, and if the cost had risen so phenomenally, why was the announcement so late coming? Delays and cost overruns of this scope surely had a genesis that should have been perceived a long time ago. What had the construction managers been doing, or hiding, so long?

TVA's inspector general's report doesn't come close to a definitive answer to those riveting questions. But it provides a synopsis of a record of denial, deceit and inattention by various levels of management that begs the question of whether TVA's word on any nuclear issue can be trusted going forward.

In a front-page story last Thursday, this paper's reporter, Pam Sohn, outlined the report made public two days earlier by Inspector General Richard W. Moore. It's worth a look back to see the high points of the mismanagement of the Unit 2 reactor work, which began with construction timeline problems in January 2008 and snowballed from there.

Managers from TVA and its Bechtel contractor, the report said, regularly "ignored data and opinions of the oversight team and others" from the get-go. In regular construction team meetings that Moore's inspectors attended, notable issues were miscast as "recoverable or normal construction problems" which could be reversed. Itemized project schedules were aligned with assumptions that showed the work progress on schedule, while "pertinent information critical to the project's performance was not provided to the Office of the Inspector when requested."

"Certain warning signs were not adequately addressed," nor were assessments that documented problems. "It's not clear how high up in the organization problems were being communicated," the report states.

The nature of the report, to be sure, raises questions about competent oversight at every level, including the Inspector General's office, whose apparent goal was to ensure that work schedules and timelines met expectations, and TVA's upper management over the nuclear division.

The inspector general's office had learned by 2010 that broader problems suggested a serious setbacks to cost estimates and completion of construction, and TVA's management had learned enough by then to reorganize management of the project. Regardless, the public was kept in the dark about the doubling of cost and construction time until just two months ago. That does nothing to build confidence in TVA's oversight and management at any level, from the Inspector General, to CEO Tom Kilgore's office, to the TVA board.

Kilgore has now acknowledged the failures in the reactor project, but he maintains that the reactor still makes economic sense, and that over the long term, the doubling of the cost will not increase electric rates. We're waiting to hear precisely how another $2 billion-plus in cost overruns can be absorbed without proportionally raising the cost of power to pay for the mismanagement. TVA may still be able to borrow more money, but it will have to pay it back.